July 9, 2018

Opportunity Equity Update for Week Ended 7/6/18

Endo Pharmaceuticals Announces the Shipping of Generic Colcrys While RH Falls Despite Upgrades

Last week, the Opportunity Equity strategy advanced 2.88%, outperforming the S&P 500’s 1.56% gain (Exhibit 1). The strategy ended the week up 14.40% YTD, or 1,014 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 7/6/181

Time Period Opportunity Equity S&P 500
Last Week (6/29 -7/6) 2.88% 1.56%
MTD 2.88% 1.56%
QTD 2.88% 1.56%
YTD 14.40% 4.25%
Inception (annualized since 6/26/00) 7.75% 5.66%

Source: Bloomberg, Miller Value Partners

Endo Pharmaceuticals (ENDP) announced that Par Pharmaceutical Inc, one of its operating companies, began shipping an authorized generic version of Takeda Pharmaceutical’s Colcrys, a tablet for prophylaxis and treatment of gout flares, as well as familial Mediterranean fever. Further, the company formed a golden cross as biotechs rallied on reports that Biogen’s Alzheimer’s drug showed positive results. Quotient Technology (QUOT) rose above its 50, 100, and 200-day moving averages. There was no news on Stitch Fix, Inc (SFIX), Endurance International Group Holdings (EIGI), or Mallinckrodt plc (MNK).

Exhibit 2: Significant Contributors to Performance, 6/29/18 – 7/6/18

Name Type Return
Endo Pharmaceuticals Hldgs Inc Equity 15.2%
Stitch Fix, Inc. Equity 18.1%
Quotient Technology Inc. Equity 7.6%
Endurance International Group Holdings Equity 8.5%
Mallinckrodt plc Equity 6.8%

Source: Miller Value Partners

RH (RH) fell despite Guggenheim & Loop Capital both reiterating their “Buy” ratings with a $175 price target, implied upside of 28.8%. Teva Pharmaceuticals (TEVA) announced it’s relocating its US headquarters from Philadelphia to New Jersey, a move aimed to streamline operations and trim costs after the state promised $40M in tax incentives. Teva also plans to expand its existing site in New Jersey, create 843 jobs, and in all create savings of roughly $250M over the course of 20 years. There was no news on Valeant Pharmaceuticals (VRX), Bank of America (BAC), and Foot Locker (FL).

 Exhibit 3: Significant Detractors from Performance, 6/29/18 – 7/6/18

Name Type Return
RH Equity -2.8%
Valeant Pharmaceuticals International Equity -1.2%
Bank of America Corp Equity -0.6%
Teva Pharmaceutical-SP ADR Equity -0.8%
Foot Locker Inc Equity -0.7%

Source: Miller Value Partners

1The performance figures reflect the results of a representative account net of management fee and certain other expenses. For important additional information about Opportunity Equity performance, please click on the Opportunity Equity Composite Performance Disclosure. The performance returns shown in this report are preliminary and are subject to revision. Past performance is no guarantee of future results.

Significant Contributors and Significant Detractors are the Strategy holdings that had the greatest effect on Strategy performance for the week. Holdings that have been in the Strategy since the end of the most recent calendar quarter are identified by name. For information on how Contributor/Detractor data were calculated and a list showing the contribution to the Strategy’s weekly performance of each investment held at such quarter end, contact us.

Any views expressed are subject to change at any time, and Miller Value Partners disclaims any responsibility to update such views. The information presented should not be considered a recommendation to purchase or sell any security and should not be relied upon as investment advice. It should not be assumed that any purchase or sale decisions will be profitable or will equal the performance of any security mentioned. Past performance is no guarantee of future results, and there is no guarantee dividends will be paid or continued.

©2018 Miller Value Partners, LLC

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